Market Analysis – 70101805 – Fishery by product resources

Executive Summary

The global market for fishery by-products, primarily fishmeal and fish oil, is valued at est. $48.5 billion and is projected to grow steadily, driven by relentless demand from the aquaculture and nutraceutical sectors. However, the market faces a critical structural threat from finite and increasingly volatile raw material supply, constrained by fishing quotas and climate change. The primary strategic opportunity lies in valorizing waste streams into higher-margin products and de-risking supply chains by qualifying alternative, non-marine ingredients.

Market Size & Growth

The global Total Addressable Market (TAM) for fishery by-products is estimated at $48.5 billion in 2024. The market is projected to expand at a compound annual growth rate (CAGR) of est. 5.8% over the next five years, driven by aquaculture's need for high-protein feed and rising consumer demand for Omega-3 supplements. The three largest geographic markets are 1. Asia-Pacific (led by China, Vietnam, and Thailand), 2. South America (led by Peru and Chile), and 3. Europe (led by Norway and Denmark).

Key Drivers & Constraints

1. Demand Driver (Aquaculture): The growth of global aquaculture, expanding at ~5% annually, is the primary demand driver. Fishmeal and fish oil are foundational ingredients for farmed carnivorous fish (e.g., salmon, shrimp), with limited viable substitutes for optimal growth and health.
2. Demand Driver (Nutraceuticals): Increasing consumer awareness of the health benefits of Omega-3 fatty acids (EPA/DHA) fuels demand for high-quality fish oil for human supplements, a higher-margin end market than animal feed.
3. Supply Constraint (Raw Material): Wild fish catch, the primary source of raw material, is stagnant or declining. Key fisheries like the Peruvian anchoveta are subject to strict quotas and climate-driven volatility (e.g., El Niño), creating systemic supply risk. [Source - IFFO, The Marine Ingredients Organisation, 2023]
4. Cost Driver (Energy): The rendering and drying processes to produce fishmeal are highly energy-intensive. Fluctuations in natural gas and electricity prices directly impact processor margins and final product cost.
5. Regulatory Pressure: Heightened scrutiny from governments and NGOs is driving demand for certified sustainable and traceable products (e.g., MarinTrust, MSC). This adds cost and complexity but also creates a premium for compliant suppliers.
6. Technological Shift: Innovation in extracting higher-value compounds (e.g., collagen, peptides, specific fatty acids) is shifting some of the product mix away from bulk commodities toward specialized, high-margin ingredients.

Competitive Landscape

Barriers to entry are high, defined by significant capital investment in processing facilities, logistical access to large-volume raw material from fisheries, and navigating stringent environmental regulations.

⮕ Tier 1 Leaders * Pelagia AS (Norway): Fully integrated North Atlantic powerhouse with strong control over raw material from catch to high-quality fishmeal, oil, and consumer products. * TASA (Peru): One of the world's largest producers of fishmeal and fish oil, leveraging its dominant position in the Peruvian anchoveta fishery. * Austevoll Seafood ASA (Norway): A globally diversified seafood company with significant, vertically integrated fishmeal and oil operations in Norway, the UK, Peru, and Chile. * Darling Ingredients Inc. (USA): Global leader in valorizing bio-nutrients, with a strong position in fish by-products through its extensive rendering and processing network.

⮕ Emerging/Niche Players * Bio-marine Ingredients Ireland: Focuses on producing high-value protein hydrolysates, powders, and oils from blue whiting for human nutrition. * Protix (Netherlands): A leader in the insect-based ingredients market, producing proteins and lipids that are direct competitors/substitutes for fishmeal in feed applications. * Veramaris (Netherlands): A joint venture producing Omega-3 (EPA & DHA) from marine algae, offering a sustainable, direct alternative to fish oil for aquaculture feed. * Copalis (France): Specializes in developing bioactive marine ingredients (peptides, collagen) for the health, nutrition, and beauty markets.

Pricing Mechanics

The price of fishery by-products is built up from the raw material cost, which is either a traded price for whole fish (e.g., Peruvian anchoveta) or the opportunity cost of processing trimmings (heads, frames, viscera). To this, processors add significant energy, labor, and capital costs for rendering, separation, drying, and stabilization. Logistics and storage costs are then added before a final margin is applied.

The final market price is highly sensitive to the supply/demand balance, with the Peruvian government's biannual anchoveta quota announcements serving as the single most important price-setting signal for the global fishmeal market. Quality grades, particularly protein content for fishmeal and EPA/DHA concentration for fish oil, create significant price differentiation.

Most Volatile Cost Elements: 1. Raw Material (Peruvian Anchoveta): Price can swing dramatically based on quota announcements. Quota cuts during the 2023 El Niño event contributed to price increases of >30%. 2. Energy (Natural Gas): A primary input for driers. European natural gas benchmark prices, while down from 2022 peaks, remain ~50% higher than pre-2021 levels, embedding higher processing costs. 3. Global Freight: Ocean freight rates, while normalizing, saw volatility of >200% during the 2021-2022 period, impacting the landed cost in key import markets like China. [Source - Freightos Baltic Index, 2023]

Recent Trends & Innovation

• Supply Chain Traceability (Q4 2023): Major producers are increasingly adopting blockchain and other digital platforms to provide customers with verifiable proof of origin and sustainability, responding to pressure from retailers and consumers.
• M&A for Vertical Integration (Ongoing): Large seafood companies continue to acquire feed producers and by-product processors to secure offtake, control quality, and capture more value from their supply chains. Darling Ingredients' acquisition of Valley Proteins (2022) highlights consolidation in the broader rendering space.
• Commercialization of Alternatives (2023-2024): Insect meal producers (e.g., Protix, Innovafeed) and algal oil producers (e.g., Veramaris) have secured major supply agreements with leading animal feed and aquaculture companies, marking their transition from niche to commercially viable alternatives.
• Focus on High-Value Peptides (2023): A marked increase in R&D and product launches centered on fish-derived collagen peptides and hydrolysates for the sports nutrition, beauty-from-within, and senior health markets, offering 5-10x the margin of bulk fishmeal.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina presents a balanced regional market. Demand is anchored by the state's significant animal agriculture sector, particularly poultry and swine, which utilize animal-based proteins in feed formulations. A smaller but growing aquaculture industry (trout, catfish) provides direct demand for fishmeal. Local supply capacity exists through the processing of by-catch and trimmings from the state's commercial fishing industry, particularly menhaden. However, large-scale processing is likely consolidated at regional facilities serving the broader Mid-Atlantic. The state's pro-business climate is offset by stringent coastal environmental regulations (NCDEQ, EPA) governing water discharge from processing plants, which can be a barrier to new capacity.

Risk Outlook

Actionable Sourcing Recommendations

1. Mitigate Geographic Concentration. Shift 10-15% of spot-buy volume or new contracts away from Peruvian-centric suppliers to those with North Atlantic or other sourcing origins (e.g., Pelagia AS, Oceana Group). This provides a hedge against El Niño-driven supply cuts in Peru, which have historically removed >1.5 million metric tons from global supply in severe years.
2. Qualify Alternative Ingredients. Launch a pilot program within 6 months to qualify at least one alternative ingredient (e.g., insect meal from Protix, algal oil from Veramaris) for up to 5% inclusion in a non-critical feed formulation. This builds supply chain resilience and provides leverage against fishmeal price spikes, which have exceeded 20% in the last 24 months.